Planning for a year's prosperity

As a professional firm of accountants, Stein Richards can advise people in the Paddington area on a wide range of tax and financial planning issues, so that you make the most of your wealth.

Income tax

Use your personal tax reliefs

Capital and the related income can normally be transferred between husband and wife or civil partners without any tax liabilities. Such transfers must be outright gifts and can be made free of both capital gains tax and inheritance tax

Consider paying your spouse/civil partner/children a salary for working in your business

Consider taking your spouse/civil partner into partnership

Consider one-off or recurring donations to charity

Benefits in kind

Keep records of business trips showing the date, mileage, and purpose of trip to satisfy HM Revenue & Customs queries

Consider reimbursing your employer for the full cost of private petrol to prevent the car fuel charge applying

Remember that no tax is charged on beneficial loans totalling less than £10,000 per employee

Pensions

Check that your pension arrangements are adequate, especially if you are self employed or not in a company scheme

There is no limit on the amount that may be contributed to a registered pension scheme. However, there are limits on the level of tax relievable contributions that can be made. The maximum amount on which an individual can claim tax relief in any tax year is the greater of the individual’s UK relevant earnings or £3,600, subject to the appropriate annual allowance (contributions in excess of the annual allowance are likely to give rise to a tax charge).

Employees in a company scheme may consider paying additional voluntary contributions to help boost their final pension, or may consider contributing to any other registered pension scheme.

Capital gains tax (CGT)

You are entitled to £11,300 of net gains free of tax (2017–18). Plan disposals to make use of this exemption

Consider deferring disposals until after 5 April to delay CGT payment by a full year

Consider the timing of disposals to take advantage of any otherwise unused basic rate income tax band, attracting tax at the lower rate of 10%

If you intend to retire from business in the next few years, plan ahead to minimise tax on disposal of your business or family company

If you have more than one home, consider making or revising an election to determine which one will qualify for the CGT exemption

Claim losses on assets that have become worthless

Consider EIS deferral relief, which allows you to defer gains on disposal of any chargeable asset against investment in new ordinary shares in a qualifying unquoted trading company.

Inheritance tax (IHT)

Review your estate planning strategy

Review your Will

Consider lifetime gifts to individuals or trusts (gifts to spouses are exempt)

Maximise business property relief and agricultural property relief

Life assurance policies can be used as a way of making gifts to beneficiaries, and also to build up sufficient money to pay any IHT that may eventually become due

The annual £3,000 exemption applies to both husband and wife or civil partners and can be carried forward for one year, but then used only if the exemption for the later year is utilised

Other reliefs are: £250 small gift exemption, marriage gifts exemption, and gifts for charities, national purposes, public benefit, and political parties

Year end tax planning for sole traders, partnerships, and companies

This planning centres on the accounting year end rather than the tax year end:

Defer income/advance expenditure

Companies may defer sales of chargeable assets until after the year end, thereby deferring capital gains

Sole traders and partnerships may consider advancing the sale of chargeable assets if current year capital gains annual exemptions have not been used

If your business is seasonal, consider changing your accounting date. The tax rules associated with such a change are complex and great care on the selection of an alternative accounting date is required

Accelerate bonuses to staff and directors

Make extra employers’ contributions to pension schemes.

If you are thinking of embarking on a new business venture, bring forward the commencement date to offset any initial losses against current year’s business profits

Gains made on the sale of business assets may be rolled over on certain classes of business asset against purchases of replacement assets. Consider whether you need to bring forward the purchase of a replacement asset to enable this relief to be used

Remember the annual investment allowance is claimable on most plant and machinery

Dividend vs. bonus

Consider the timing of dividends and bonuses with regard to the personal tax position of company shareholders

At Stein Richards we have a wealth of experience in helping individuals to maximise their personal wealth and businesses to boost their profitability. If you’re based in the Paddington area, contact us for assistance with planning for a year’s prosperity.

Stein Richards Limited registered to carry on audit work in the UK and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales. We use cookies on this website, you can find more information about cookies here. Stein Richards,
10 London Mews, Paddington, London W2 1HY